BSEC sees no complications in issuing IPO shares among employees of two companies

MOHAMMAD MUFAZZAL | Sunday, 18 April 2021

The officials of the securities regulator see no complications in issuing IPO (initial public offering) shares among the employees of two companies which recently have received the regulatory approval to go public.

Talking to the FE, a senior official of the Bangladesh Securities and Exchange Commission (BSEC) said the employees' sense of responsibility will be strengthened if they are allowed to get the shares which are treated as IPO shares.

"We think the employees will feel due responsibility and compassion to the company if they are allowed to get shares," said Prof. Shaikh Shamsuddin Ahmed, a BSEC commissioner.

In last week, the securities regulator allowed the Midland Bank to issue 3.5 million shares among its employees and those shares will also be treated as the part of the company's IPO.

To this effect, the BSEC on Thursday issued a notification exempting the issuer bank from the provision of public issue rules regarding stipulated IPO quota for different types of investors including the general ones.

In the existing public issue rules, there is no provision of distributing shares to a company's employees.

As a result, the securities regulator has waived the company from the public issue rules through a separate notification.

In October, 2020 the securities regulator also allowed Robi Axiata to allot 136.1million shares to its employees under the Employee Share Purchase Plan (ESPP).

Those shares will also be considered as a part of the IPO approved by the securities regulator.

"We have considered two pleas of distributing shares to employees as we belief they (employees) will take care of the companies after the listing with the stock exchanges," said the BSEC commissioner Mr. Ahmed.

He said the instances of issuing IPO shares among the company's employees are also available in other countries.

"Shares of the employees will be locked for two years. So, at the moment we do not see any complications in allowing the companies to shares among their employees," said the BSEC commissioner Mr. Ahmed.

The securities regulator has imposed two-year lock-in on the shares of the employees of Robi and Midland Bank.

Asked, whether the allotment of IPO shares to the companies' employees can be a trend in upcoming days the BSEC commissioner said they will observe the situation.

"We will observe the impact of allotting IPO shares to the companies' employees. The facility availed by the Robi and Midland Bank will say whether the allotment of such IPO shares will further be considered or not," said the BSEC Mr. Ahmed.

Of the two companies, Robi made its debut trading on December 24, 2020 after raising a capital worth Tk 5.20 billion under fixed price method.

Midland Bank will raise a capital worth Tk 700 million under the fixed price method.


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